Morocco’s economy on the rise in 2017

Morocco’s economy grew by an estimated 1.5% in 2016 due to the adverse impact of poor rainfall but the economy is projected to grow by 3.7% in 2017.

Parliamentary elections in October 2016 were won by the right-wing Islamist Justice and Development Party.

COP22, held in Marrakech in November 2016, led to the signing of the Paris Agreement, ratified by 115 countries that produce more than 75% of global greenhouse gas emissions.

Poor rainfall limited growth to an estimated 1.5% in 2016, but growth is projected at 3.7% in 2017. Major public policies are starting to bear fruit, with agriculture gradually diversifying and industry, driven by the automotive sector, on an upward trend. Thanks to the country’s stability, its exceptionally improved business climate (with its ranking by the World Bank report Doing Business up ten spots since 2008) and the sustained development of its infrastructure (particularly ports and railways in 2016), Morocco has attracted remarkable levels of foreign direct investment compared with the rest of the subregion and the continent. The main macroeconomic aggregates have also improved, with the budget deficit projected to be 3% in 2017.

Two key public policy trends emerged in 2016. First, Morocco’s hosting of the Conference of the Parties (COP 22) on climate in Marrakech was the culmination of a year strongly focused on environmental issues. The first power station in the Noor complex in Ouarzazate opened in February 2016, and work commenced on the second and third power stations. The “Zéro-Mika” operation led to the complete prohibition of plastic bags thanks to awareness raising and the introduction of alternatives. The second key trend has been the active strengthening of Morocco’s ties with Africa. At the 27th African Union summit in July 2016, King Mohammed VI announced his desire to see Morocco re-join the Union, and the country was admitted in January 2017. Following his announcement in 2016, the king made an official tour of Tanzania, Rwanda, Ethiopia, Madagascar and Nigeria, all less traditional partners than the French-speaking West African countries. As a result, work began on a gas pipeline between Morocco and Nigeria in December, and a EUR 2 billion contract has been signed with Ethiopia to build an industrial site aimed at making Ethiopia self-sufficient in agricultural fertilisers by 2025.

In terms of entrepreneurship and industrialisation, the performances of Morocco’s new industries (automotive, aeronautical and electronics) have vastly diversified the country’s export basket after a decade of active strategies in this direction, but there are still obstacles to the development of companies. The 2015 Growth Diagnostic conducted by Morocco, the African Development Bank and the Millennium Challenge Corporation (MCC) identified education and certain aspects of the legal framework (taxation, the justice system and land ownership) as major constraints to the development of small and mediumsized enterprises (SMEs). The size of the informal economy has also been regularly blamed. The new “self-entrepreneur” status created in 2015 and the gradual extension of social benefits to the selfemployed should allow some of those operating in the informal economy to move into the formal sector.